On October 30, value investor Duan Yongping said Warren Buffett’s railroad is “nearly a monopoly” and appears highly profitable, adding that asset-heavy businesses can still be good, and pointing to TSMC.
The post also highlighted a follower’s detailed question about how to judge a business model at first glance: whether to look only at the most basic way a company makes money, or to include its moat from the outset. The question used Mixue Bingcheng as an example, describing a path of expanding via low-barrier franchising first and then profiting by selling ingredients, packaging and equipment to franchisees. It further asked whether focusing only on the former would prematurely exclude asset-heavy firms with weaker pricing power, such as Walmart and railroads, while noting that Buffett has invested in such companies.
Duan responded by citing railroads and TSMC to argue that asset intensity alone does not determine business quality, suggesting that asset-heavy businesses can possess advantages and deliver strong profitability.
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